DrumBeat: February 7, 2009

SAN FRANCISCO (MarketWatch) - The Organization of Petroleum Exporting Countries, in an effort to prop up flagging oil prices, is likely to agree to further production cuts when its members gather next month, Iraq's oil minister said Saturday.

"In March, OPEC will convene and there will be an intention for more production cuts to shore up prices," Hussain al-Shahristani said, according to a media reports.

Henry Groppe, founder of Houston-based Groppe, Long & Littell, is 83 years old, a vegetarian and has been a forecaster in the oil and gas business since 1955. And he is not afraid to go against the conventional wisdom. One year back he predicted the oil price would collapse in the second half of the year -- and not reach the much talked-about price of US$200 a barrel.

Now Groppe, a special advisor to the Toronto-based Middlefield group of companies, has done his analysis and concluded that between now and year end the price of oil will double. If that forecast pans out, oil will hit US$80 a barrel, or more than double what others are predicting. His advice to consumers: Enjoy the current low gas prices, because they won't last for much longer.

BEIJING -- New questions arose about China's dam building boom rose as a recently released government plan said some of the 1.4 million farmers relocated to make way for the Three Gorges Dam would have to move again.

The plan for the relocation and urbanization of farmers living near the Three Gorges Reservoir was published online by the government Thursday and includes some of the most pointed acknowledgments of the problems created by the forced migration of 1.4 million people to make way for the world's biggest dam.

London, 7 January (Argus) — The future ownership of the Huntingdon oil field in the UK North Sea is unclear, as operator Oilexco North Sea (ONSL) prepares to enter administration.

Huntingdon was hailed as the biggest UK oil find for at least five years when it was discovered in 2007. Estimates of proven and probable reserves range up to 220mn bl of oil equivalent (boe).

This is the first time a UK operator has gone into administration, analysts said, and attention will be paid to the role taken by the UK government. But one analyst said: “It shows how quickly problems can arise if companies need to extend or roll over debt facilities.”

A comparison of the $827 billion economic recovery plan drafted by Senate Democrats and moderate Republicans with a $820 billion version passed by the House. Additional debt costs would add about $350 billion or more over 10 years. Many provisions expire in two years.

LAGOS, Feb. 7 (Xinhua) -- Shell's Utorogu Gas Plant located in southeastern Delta State was attacked, said the Movement for the Emancipation of the Niger Delta (MEND), the most prominent militant group in Nigerian oil-producing region, in an e-mailed statement reaching here on Saturday.

"The Movement for the Emancipation of the Niger Delta can confirm that it's fighters based inside Delta state of Nigeria, today Feb. 7, 2009 attacked the Utorogu Gas Plant operated by Shell," said the statement.

It said this attack and many smaller ones to come would "like the rains and wind heralding the arrival of the hurricane."

BAGHDAD (Reuters) - A collapse in oil prices will set back Iraq's ability to rebuild, train and equip its maturing security forces as U.S. troops withdraw, the U.S. general in charge of efforts to train Iraqi troops said.

Rio Tinto, continuing its scramble to raise cash and reduce its big debt load, is considering a possible asset sale to Japan's Mitsui & Co., people familiar with the matter say.

The possible deal, which these people say could net the Anglo-Australian miner proceeds of $5 billion, is one of a number of options Rio is considering as it grapples with the fallout from its ill-timed 2007 acquisition of Alcan Inc. That deal saddled Rio with $39 billion in debt just ahead of a steep drop in aluminum prices, a situation that has sent Rio scrambling to shore itself up.

For example, Rio Tinto is also in talks with Chinalco, the state-owned Chinese aluminum company, for a massive cash infusion. At the same time, it is contemplating the sale of additional shares to its existing investors to raise cash.

ALGARY, Alberta (Reuters) – Health officials in Alberta confirmed on Friday that there are more cases of cancer than expected in a small aboriginal village downstream from the Canadian province's massive oil sands plants, but they said there was no cause for residents to be alarmed.

. . .the study found 47 individuals in the community had 51 different cancers over the 1995 to 2006 study period, more that the 39 cases health officials had expected to find.

WASHINGTON (AP) — A spinoff of Halliburton Co. is on the verge of pleading guilty to federal bribery charges.

Court papers filed in Houston no Friday show Kellogg, Brown & Root LLC is preparing to plead guilty to violating the Foreign Corrupt Practices Act for promising and paying tens of millions of dollars in bribes to officials in Nigeria in exchange for engineering and construction contracts between 1995 and 2004.

Quest Energy Partners LP, Oklahoma City, (Nasdaq: QELP) says it has suspended distributions on its common units, beginning with those from the fourth quarter of 2008 that were scheduled to be paid in mid-February.

Quest owns more than 2,300 wells and is the largest producer of natural gas in the Cherokee Basin in southeast Kansas and northeast Oklahoma.

The proposals should also be set in the wider economic context. On paper, the $71 billion that the "Making Work Pay" tax proposal would leave in Americans' pockets this year should boost discretionary spending. But other factors are lightening wallets, such as the $33 billion fall in S&P 500 dividend payouts expected this year by Standard & Poor's.

In addition, tax cuts will likely go to paying off debts. Certainly, the much bigger benefit accruing from falling gasoline prices -- an annualized $205 billion in 2009 compared with last year, based on average prices -- has not helped retailers much.

"Infrastructure" is another buzz-word that warrants detailed examination. Andrew Keen of Sanford Bernstein points out that of the roughly $900 billion plan, only about 3% is allocated to improving roads and bridges. Steel bulls, therefore, should focus less on the overall dollar number, and more on the likely passage of any "Buy American" measures which would bolster prices.

SAN FRANCISCO -- The federal government settled Friday a lawsuit that accused two U.S. agencies of financing energy projects overseas without considering their impacts on global warming.

The Export-Import Bank of the U.S. and the Overseas Private Investment Corp. agreed to provide a combined $500 million in financing for renewable energy projects and take into account greenhouse gas emissions associated with projects they support.

The Bush administration had argued that the "alleged impacts of global climate change are too remote and speculative" to require the environmental reviews sought by the plaintiffs. It also argued that the two agencies are exempt from NEPA.

Gheit: Look, oil companies are going to lose 40% of their cash flow this year, and capital expenditures will be cut sharply […] If you thought the fourth-quarter numbers [for oil companies] were bad, wait until you see the first-quarter numbers. Oil prices are now about where they were five or six years ago, but the cost of extracting oil has doubled in that time…

At the larger oil companies, 80-90% of spending is on new projects to offset decline [at existing fields]. Most companies are indicating that the rate of decline will increase because the capital expenditures just can’t keep pace.

[Older fields] are like aging athletes…you don’t want to spend the money, sign them to a long-term contract. So all the bets are on the rising stars, but those are projects that won’t have an impact for maybe five years.

President Barack Obama has intensified his push for lawmakers to quickly wrap up a fiscal stimulus package. At the House Democrats’ retreat in Williamsburg, Va., Thursday night, he praised lawmakers while urging them to work with the Senate to get a bill passed quickly. He also had a sharp comment, apparently aimed at Republicans who want to put more tax cuts into the package now being debated in the Senate. “We can’t embrace the losing formula that says only tax cuts will work for every problem we face; that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or falling schools and crumbling bridges and roads and levees,” he said. “I don’t care whether you’re driving a hybrid or an SUV _ if you’re headed for a cliff, you’ve got to change direction.”

Strong players will find opportunities in several areas. For NOCs, M&A is in the air. NOCs which purchase overseas assets are likely to seek acquisitions of smaller independents and should explore opportunities to acquire major players. To compete with IOCs, they must realise their increasing role as drivers of new investment; they accounted for one-third of M&A spend in 2006 and the International Energy Agency (IEA) forecasts a lack of future investment funds to cover expected declines in production. Acquiring an OFS or EPC provider can help NOCs address capability gaps.

IOCs will look towards cost savings and shifting asset portfolios to increase E&P activities in the region and will look for long-term investment opportunities to strengthen resource positions. Strong EPC and OFS players should look to vertical integration and consolidation opportunities to gain market power. The leaders will focus on differentiation through more rigorous quality control and timely delivery. Private equity funds will also find good opportunities in smaller OFS companies — and some funds will be looking to do a “roll-up play” of OFS.

“Collaborative partnerships will be a key play for all. Long-term strategic partnerships can achieve risk-sharing and expand capabilities in major project delivery and operations,” stated Dr Kombargi.

Your work on atmospheric chlorofluorocarbons led eventually to a global CFC ban that saved us from ozone-layer depletion. Do we have time to do a similar thing with carbon emissions to save ourselves from climate change?

Not a hope in hell. Most of the "green" stuff is verging on a gigantic scam. Carbon trading, with its huge government subsidies, is just what finance and industry wanted. It's not going to do a damn thing about climate change, but it'll make a lot of money for a lot of people and postpone the moment of reckoning. I am not against renewable energy, but to spoil all the decent countryside in the UK with wind farms is driving me mad. It's absolutely unnecessary, and it takes 2500 square kilometres to produce a gigawatt - that's an awful lot of countryside.

Unlike the cars popularized during the 1970s energy crisis (when diesel fuel was cheaper than regular gas), today’s diesel-powered vehicles run quietly, accelerate quickly and meet emissions standards in all 50 states—even smog-conscious California. According to the U.S. Department of Energy, today’s so-called clean diesel engines are not only more powerful, but they’re also 30 to 35 percent more fuel-efficient than comparably sized gas ones.

And they’re starting to pop up on this side of the pond. Over the next five years, industry analysts expect the share of diesel vehicles sold in the U.S. to more than triple its current 2.2 percent. . .

The U.S. government is dangling some incentives for clean diesels: $1,300 for the Jetta TDI, $900 for the Mercedes ML. But until tax breaks broaden, diesel fuel costs improve and manufacturers put diesel engines into more small cars, these vehicles will likely remain a niche for Americans who appreciate potent performance but want a touch of green.

The assets include certain VeraSun production facilities in South Dakota, Iowa, Minnesota, and Indiana. The company will sell all production facilities and operations in separate or combined transactions.

"Carbon trading, with its huge government subsidies, is just what finance and industry wanted. It's not going to do a damn thing about climate change, but it'll make a lot of money for a lot of people and postpone the moment of reckoning."

This will probably be the next speculative bubble five or ten years from now. Once all the current toxic paper is swept away, and the surviving banks and brokerages have had a couple of years to catch their breath, they will look around for new fields to parasitize. Carbon trading is not only an unlimited source of fictitious paper, it is environmentally friendly in the brokers' advertisements.

Beyond the effects on students (of endoctrinating them in neoclassical economic theory, our regnant paradigm) there are effects on the public mentality. Here, too, the prevailing economic approach to moral values tends to debase them. Goodin, Walzer, and Kelman all point to the fact that society sets aside certain areas as "sacred," and that to make the public think about them in terms of costs and benefits "secularizes" them, stripping them from their speial moral standing, and thus ultimately causes them to be treated the way neoclassicists say they are. For example, to create markets for rights (as part of an incentive scheme), say, selling pollution rights, undermines the taboos against such behavior, it normalizes it, and hence makes it less costly and more common.

For example, to create markets for rights (as part of an incentive scheme), say, selling pollution rights, undermines the taboos against such behavior, it normalizes it, and hence makes it less costly and more common.

Yes, but the other approach is to treat it as a technical, not a moral problem. If you harness prices (perhaps increased via taxes) you can get substantial compliance, without inducing guilt. Look how well we have done by making recreation drugs (other than alcohol) into a moral/legal problem. We've simply ended up becoming the prison nation, and still the usage of the product remains high. If a few rich people, insist on continuing to do something I don't approve of, but have to pay a substantial financial price for, it shouldn't really bother you. I suspect this is an area where the basic pyschological structure of thinking of liberals and conservatives differ, the later try to see things as a moral problem first. The former group is more interested in minimizing the total cost to society.

The EROIE for oil is not directly related to price. The energy inputs are the energy used to make drilling rigs, drilling costs in terms of BTU's, lifting costs, and pumping costs. The major pipelines are in place. The EROIE for a well drilled that will produce over a million barrels of oil is much higher than 1.1 as the well will produce more oil BTU equivalents than were used to produce it. People have been publishing their guesswork instead of scientific study; and yet America slides deeper into debt and recession.

EROEI for oil is about the only time the EROEI concept has some validity. It is valid for oil because the energy form in is mostly the same as the energy form out. For the most part apples and apples are being compared in the case of oil.

When the energy form in and out are different EROEI is not a valid concept because the logic is false. Things that are different can not be compared, added, subtracted, multiplied or divided. If they are anyway the result is silly nonsense.

Hey X;
What's the EROEI of driving 20 miles to pick up some AA batteries, Charcoal and Lighter Fluid from the discount store? You could even be picking up some Apples and Oranges, which have a different energy value to your body than the cooking and lighting fuels, which of course you can't metabolize.

It might very well 'be worth it' for you to do this, since you NEED those other fuels and wouldn't/couldn't choose to use your car's gas to accomplish those needs.. but the EROEI argument simply tells you whether you're operating at a loss or not, and whether you're spending down your energy reserves faster than you can make them up again.

With such abundant energy, the above scenario seems silly to ask, which is why most people wouldn't bother.. once supplies are down to fumes, we had better know we are using every drip as effectively as possible, and particularly those drips that are being used to make more drips, cause if there's only one spare drip after we spent five to make it, that's not much to get to the store for batteries and apples.

Just because you don't like the result, it does not mean the math is wrong. Every time you post your EROEI complaint I see Dorothy clicking her heels together saying "there's no place like home..." But smarter people than me have tried to explain it to you, so carry on dude.

As a former physicist, this is just not correct. The effective value of a BTU of low grade heat is much lower than a BTU of high temperature heat. From the former I could derive only a small amount of useful work ( <= delta T/T ), and indeed by the use of a heat pump, I could "create" a BTU of low grade heat with much less than a BTU of high quality energy.

EROEI for oil is about the only time the EROEI concept has some validity.

Perhaps there is truth in that statement but that is why I have always maintained that both "E's" should be dropped. Just make it ROI, return on investment. Once ROI reaches zero, all production stops. Well, sometimes they will continue to operate at a loss, hoping for a return to profits but only very large oil companies can even do that.

As long as oil drillers can make a profit drilling for oil, they will keep drilling. But when the profit stops, they stop drilling. And when you are measuring ROI you are never comparing apples to oranges. Dollars are always dollars just as apples are always apples.

This is broadly correct. Instead of energy in vs. energy out, you end up with cost of energy in vs. cost of energy out. Since fossil fuels are about the lowest cost energy, the cost of energy in/out is directly comparable. That is not so much the case for other forms of energy.

When it takes a barrel of oil to get a barrel of oil, the cost will exceed the revenue, and the operation will be unprofitable. ROI is negative.

This basic arrangement can be affected by all sorts of things, such as subsidy, fixed prices, capital writeoffs, change in the value of the accounting unit (currency), etc. etc. but it tends to work out in the end.

A government's role can be in part to financialize additional costs, such as environmental degradation. For example, the Alberta tar sands projects, or Malaysian palm oil projects have environmental consequences. This could be mitigated by increasing the costs. Alberta does this somewhat already by its royalty scheme.

Under the basic "Peak Oil" scenario of a smooth 4%-6% decline in energy production per year, there won't be any shortages. If the supply is down 5%, then the price will rise enough to incentivize people to use 5% less. Gasoline will still be available, for a price. It is so easy to use 5% less that I don't see any particular problems arising from that until maybe 15 years down the line or so. But, 15 years is a long time to make adjustments. The transition from horses to automobiles was about 15 years long.

You can build a lot of trains and superinsulated apartment buildings in 15 years. It's sooooo easy.

In 10 years, our middle case is that the top five net oil exporters--Saudi Arabia; Russia; Norway; Iran & the UAE--will have already shipped about 80% of their post-2005 cumulative net oil exports.

Closer to the US, our three closest sources of imported oil--Venezuela, Mexico & Canada (three of our top four sources of imported oil & jointly accounting for about 40% of current US net oil imports)--had combined net oil exports of 5.0 mbpd in 2004 (EIA). I estimate that they were down to about 3.9 mbpd in 2008. At this volumetric rate of decline, they would collectively approach zero net oil exports in about 14 years.

This is broadly correct. Instead of energy in vs. energy out, you end up with cost of energy in vs. cost of energy out.

That is not at all how I would put it. The energy in as well as the energy out are only part of the equation. You have salaries, rental of the equipment, pipe cost, drill bit costs, mud costs, the cost to pour the liner and a host of other costs and all in an effort to make a profit. And of course there those dry holes that are all a total loss. If you must sell your product, oil in this case, for less than your total cost to produce it, you must shut down your operation and go home.

Yes, but following X's logic, you are still comparing dissimilar things by way of dollars. Using the price mechanism, which has distortions and wild swings which do not necessarily reflect energy in and energy out could lead to some bad investment decisions when the dollar value catches up with the energy value.

Apples and Oranges.....
My body as a machine might need two thousand calories a day to function at about idle, probably twenty apples a day. For clothing, shelter and security I need more, depending on the quality of lifestyle I fancy.

I get my apples by picking the easy to get low hanging, best quality, highest calorie content first because they take the least amount of energy expenditure to procure.

Now as the low hanging fruit is picked off, I have to make a ladder and work a bit harder to obtain the same amount, from further up the tree.

The trees get old and start to die, the fruit quality is lower and the amount is less. I need to find more trees, I need to walk further and maybe feed a growing family, I find a giant grove but deplete it faster because I require more, more energy is required to find and pick and transport them and I have more people needing them.

I think apples and oranges compare quite well with oil.

Money is not in the energy equation until I pick more apples than I need and begin to trade them.
The calculation does not change for me with or without money. If I can't pick enough apples to cover the energy I expend, locating, building infrastructure, picking, transporting and marketing, it's not worth the effort doing so.

When the operation becomes massive with numerous interconnects, the charlatans arrive with the ability to confuse, omit and deny with claims of comparing apples and oranges.

No matter if I am picking apples or oranges, I still pick the low hanging fruit first and I still need two thousand calories a day to survive. Picking less oranges because they have more calories changes nothing, the trees are similar and the so are the logistics.

In the end if I am not ingesting the amount of energy I require to live, by picking apples or oranges, I must find an equivalent food source or start culling my family.

Keeping it simple would have been very, very easy for the nomadic hunter and gatherer, the rumbling in the stomach would be a dead giveaway. Industrialization and various engineering practices has confused the issue but in the end we will be back to basics. The rumbling in your stomach will tell you when your EROEI is negative.

EROEI for oil is about the only time the EROEI concept has some validity.

No. EROEI may be a compex calculation and therefore intractable, but it's a pretty deep & important concept, masked only by the fact that we are experiencing a temporary energy glut. EROEI is a necessary constraint on all life, always has been and always will be. And it has nothing to do with money, hence that second E, although even some very smart people don't get it, or conflate it with fiscal matters, as in this series of comments.

For instance, polar bears are now being wiped out largely because the EROEI of catching seals has on average fallen below one. This means starvation and cannibalization. There are no "alternative fuels" for them to switch to. Adopting a monetary system would not change this reality.

Similarly, a starving human might eat both apples and oranges, as well as anything else she can find, and it all becomes part of the all-important EROEI calculation. It's not the ONLY important calculation, but after things such as water and temperature control it becomes the most important for most living things.

oh yeah sure X as usual .. you are right.
So if some one put a bullet between your eyes instead of guillotining your neck ,,,,blah blah ,,, now that's two completely different procedures seen from the spectators POV.
The difference is in the eye of the beholder I guess, but both ways would neutralize your trolling.
/snark ?

EROIE on oil, or any other energy source is not a good metric (although it is useful as part of a basic understanding of system issues). If the energy inputs are not directly created from oil, than your oil production could be seen as a way to convert one form of energy into another presumably more valuable per BTU form. Someday oil will only be used as chemical feedstock, lubrication, and specialty fuel uses. At that time it may make perfect economic sense to produce oil at EROEI of less than one. Obviously at that point in time, oil is no longer a primary energy source, i.e. other energy sources must have almost completely displaced its use for primary energy.

Of course the EROEI on oil should also include the downstream energy inputs, transportation of the oil and oil products, and other refining inputs ;natural gas, and electricity being I believe substantial.

Drill rigs use diesel for their power. Oil service ships and drill rig trucks used diesel or gasoline. It is not the same as with ethanol where they use cheaper energy to create the output and had indirect hydrocarbon emissions that some studies did not include in their accounting. I read one article that there is danger of the loss of an entire system of rainforests in Indonesia as biodiesel mandates are requiring more palm oil. The rainforests once absorbed much carbon dioxide from the atmosphere. Current laws in numerous nations require the use of ethanol and biodiesel even in situations when it is not economical or environmentally prudent to do so. Numerous conservationists have declared such stripping of the rain forests of the world to be an environmental nightmare.

That was the sentence I focused on too, but is it actually true? And even if it is, shouldn't the price OPEC is demanding be ~2x their former price band of $22-28? How do they justify insisting that it needs to be $75 or $80 a barrel?

That was the sentence I focused on too, but is it actually true? And even if it is, shouldn't the price OPEC is demanding be ~2x their former price band of $22-28? How do they justify insisting that it needs to be $75 or $80 a barrel

If you want to maintain something like the current level of world production, say (80-90 mbpd), it may well take $75-80. The problem, is we will be replacing the old "easy" oil, with increasingly more difficult to extract sources. So perhaps if the price could be put/maintained at $75-80, we could avoid a serious production falloff for a decade. The price is set at the margins, not by the average production cost. And that doesn't factor in the fact that the exporters are coming to realize that their days of exporting oil are limited. They ought to want to defer production until the future when the price is expected to be higher. -Of course what they ought to do, and what they actually do, due to the pressures of current obligations are often quite different.

Sure, but is that figure even accurate to begin with? Has the cost of oil production really doubled in five years, or is the source of that information the big oil companies that have raked in money hand over fist over this same time frame?

... China has just announced that it will spend $123 billion to provide universal health care within two years instead of eleven. This in itself could relieve a lot of potential social and economic tension (as it might in America, were it ever to be tried).

The economic stimulus package is also going to spend massively on constructing new inter-city rail lines - $88 billion is proposed, with $44 billion having already been spent last year...

I do not expect any free float until then, because to float their currency with a weak banking system is simply gross stupidity, and the Chinese haven't been showing too much of this over the last twenty years. Occasional stupidity, yes; gross stupidity . . . they leave that to the experts. We have lots of experts in America, yes: We lead the world in that capacity.

Free trade is probably the most sacred of the deities in the neoclassical pantheon. Surprisingly, I seldom if ever hear it discussed here on TOD. Outside of labor unions, and we all know they're just a bunch of Communists controlled by criminal mafiosas, no one else seems to challenge the free trade orthodoxy.

The NY Times editorialized this morning:

With the global economy staggering, wealthy countries need to pull together to...protect the free flow of trade...

First, the Obama administration must free America’s stimulus package from its protectionist shackles and ensure that it is big and open — as large as the crisis that threatens this country and the rest of the world.

The idea that free trade is more efficient is a fundamental tenant of economics. The notion is that those who can produce goods most cheaply should do so, then trade with others similarly able to provide the least expensive products, thus providing the lowest cost for all products. Of course, quite a lot of the comparative advantage claimed for "free trade" is the result of vastly different wage scales, which have been exploited by multinational corporations to shift production from high wage states or nations to lower wage ones. The whole thing rests on cheap transport costs, i.e., low cost fuel. I think it's clear that the economists ignore the energy (and environmental) side of the equation, looking only at dollar flows. As the cost of energy (read: oil) may be expected to climb after Peak Oil, it would seem obvious that "free trade" won't be so free afterwards.

It should also be obvious that any attempt to achieve "Energy Independence" will require some protectionist moves. Some preferential quotas, subsidies or taxes must be imposed to change the economic equation toward local energy producers. Otherwise, the oil from nations with lower production costs will continue to flood into the U.S. market. The NYT and others who point to the Smoot-Hawley tariffs as the cause of the Great Depression are ignoring the vast difference in our energy situation today, compared with that of 1930. Back then, the U.S. was a major oil exporting nation, whereas today, we import more than 2/3 of the oil and oil products we consume. The alternative approach might be to allow average wages in the U.S. to fall down to Third World levels, then the U.S. would become the "low cost" producer. I suggest we start with Wall Street and the editorial writers at the NYT, cutting their compensation to $2 per day, which is the pay for more than 1 Billion people now...

There are several financial blogs I follow, but I don't recall anyone really challenging the idea of free trade. It seems to be the most sacred of sacred cows.

Free trade is inextricably bound up with cornucopian world views. Leave aside the question of whether any trade is actually "free". Whether it's "free" or not free trade does much of what its proponents claim it does: it creates global economic growth. It is therefore doomed, because it's unsustainabible.

So-called "free trade" increases connectivity and the rate of global economic metabolism at a high cost in energy and complexity investment. Not only does it exhaust resources much more quickly, but it provides a mechanism for local criticalities to be held at bay by the metabolic excess. But this allows self-organizing criticality to occur at the largest scale, until ultimately an arbitrarily-small perturbation can unpredictably trigger a global collapse back to far lower levels of complexity and connectivity.

I don't think any of us focus on how dependent we are on imports from other countries. If we lost imports, how long could we keep our cars in good repair? How long could we keep the grid and electric power plants repaired? How quickly would our food supply drop, because essential elements of the supply chain (fertilizer, diesel, pesticides, packaging plants, tractor tailors) would be out of commission, because some essential element was missing?

It's rather like all the little entities (nations, corporations, populations) controlling energy resources and crucial materials have been subsumed by "free trade" into one large functional organism, each part of which is leveraged to higher performance by the other parts. This enables the uber-critter to get bigger and metabolize faster than would have otherwise been the case. Problem is, that critter can only function at that large scale and can't evolve backwards. It is robust, but when it fails, it fails in a big way, across what were previously non-overlapping fitness spaces.

This is the advantage exploited by evolution in developing multicellular critters with specialized cells and fractal distribution systems. Those avoid the ultimate insoluble problems of empire by dying. A workable system for individuals, not so good for a planetary civilization.

Hope I'm wrong, but I think things will get weirder than most folks suppose...

If we lost imports, how long could we keep our cars in good repair? How long could we keep the grid and electric power plants repaired? How quickly would our food supply drop,

I think our cars would last longer. Nothing like cutting their usage by a factor of roughly four. The other problems would be solvable with good government, but with PAU (Politics As Usual) could easily be badly botched. Having seen the insane actions of the Senate this week, I am not optimistic.

The point she is aiming at, however, is that we just don't know where they pinch-points will be. When our products consist of a dizzying slew of materials, some imported, some from high-energy industries, and some that are just commonplace and banal, and we haven't had to think about which little components in there are necessary for it to function, but are about to become extinct. Sure, a workaround might be entirely possible, but then there's the time question again, like with building out solar hot water on 200 million rooftops. It's easy, but now inaccessible.

There was a story on drumbeat earlier this week of a chemical compound running short at labs around the world, because of the decrease in plastics production, from which it is a byproduct.

"If we lost imports, how long could we keep our cars in good repair? How long could we keep the grid and electric power plants repaired?"

Funny this makes me think of my Peace Corps years in west Africa. I think w/o imports it might be something like it was (and still is)there. The supply chain for spare parts was missing a few links. There was lots of stuff around from the communist block aid days and so forth. No spares. Silly me thought I would go into a British Leyland dealer to get British Leyland parts but the 'system' had evolved differently.

Fuel was short, vehicles old and repairs were usually 'creative'. My first sighting of one of the Land Rovers was with a palm frond and a chunk of ironwood holding the rear spring together heading down the road. We 'cannabalized' whatever didn't run for spares. Our old hand start diesel genset gave power for just 4 hours a day. Dead reliable (in the warm climate), no batteries needed, couple more for spare parts.

Nothing moved w/o being pretty fully ultilized. Dump trucks were 40 passenger vehicles. My Land Rover carried livestock, charcoal, and/or a bunch of riders whenever I went to town. I'm sure the oil patch folks have seen similar things.

Anyway I think 'we' may have to 'evolve' along similar lines. Thinking of future USA, yeah, the wierdness potential is definately there.

I also remember Nate Hagens posting a memo by Larry Summers the other day, something to the effect that high polluting industries should be moved to countries where the cost to pollute is less expensive.

So maybe in addition to nations with low labor costs, perhaps nations where the penalties- or costs-to-pollute are kept low might also have a competitive advantage over the U.S.

Isn't that already part of the equation in U.S.-China trade? I'm sure that it does affect the cost of producing plastic salad shooters (Kunstler's inspiration) to impose environmental and safety standards. When you add that savings to the direct labor costs its hard to imagine NOT going to third world countries.

I've often wondered if there is any moral position on off-shoring or not. Why should a low skilled American or Britan or German earn more than an equally skilled Chinese or Bangladeshi? Unless there is some kind of social compact between the capitalist and the wage earner to the exclusion of someone outside of what is in reality an artificial geographical border.

Restricting free trade will be popular right until the bills become due. Those struggling to get by now would balk very quickly if, for example, tariffs were suddenly placed on Chinese imports. In addition, those currently profiting through exports are also going to be somewhat unhappy with restrictions when their jobs go away because of prohibitions or heavy tariffs on their products.

I am not saying that there is not a case for some restrictions but I don't think the vast majority of the American people have the stomach for it,whether they favor restrictions or not in the abstract.

Given all the outsourcing done and the hollowing out of our manufacturing base, I doubt if we will be able to produce decent substitutes for imports for a very long time. In the mean time, people would have to do without many of the goods they take for granted or pay a very high and, in many case, simply unaffordable price.

We need to stick at what we are good at --- blowing up the whole world's financial system.

It should also be obvious that any attempt to achieve "Energy Independence" will require some protectionist moves.

Not if "energy" is defined broadly enough. We could have net energy exports being the same as net energy inputs, but still import some forms of energy. If for example country A has tons of hydropower, and country B tons of oil, then they could trade their respective surpluses with each other.

There is also a severe problem with the psychological perception of fairness in trade. I see every advantage of my trading partner as an underhanded attempt to take advantage of me. But, all of my advantages I will think are perfectly fine. Then the local special interests will go to work to lobby corrupt my perceptions even further. The diffuse advantages of trade (like say footwear being affordable to the poor because of it) are all to easy to ignore.

None of this implies, that the freest trading system is necessarily the best one. But, it should serve as a warning that if unchecked our nearsightedness canl lead us into some very harmful actions. We also tend to ignore how our trading partners will see our actions. Any restrictions that are unilaterally imposed will generate anger and backlash from our trading partners. Local special interests which are lobbying for their own narrowly focused interests won't want you to see the downsides.

In some very specialized high tech areas, such as say electonics, computers, computer software, photovoltaic technology, drugs, and medical technology, the advantages of free trade are immense. In these areas where research costs (and availability of expertise) dominates the development cycle the largest possible market (idealy the entire world) maximises the rate of development. The past twenty five years I've spent working in small high tech companies that were world leaders in their (narrow) niches. We hired from all over the world, and sold product to all over the world. If we had been restricted to a narrower market, technological improvement would have taken several times longer.

I'm an engineer and started working in "high tech" when it was defined as "aerospace", working with computers. That was before the invention of the micro processor and the PC. I've been mostly unemployed for the past 30 years, in part because guys like you hired people from other countries instead of hiring me. What efforts I might have added to the general advancement of technology have been lost. That was a consequence of the ability of the computer world to hire and develop products overseas where the labor costs were much lower. Call it "free trade" if you wish. There is much evidence that those low paid workers are getting the proverbial shaft for their work. Look at the stories about the number of factories closing in China and the rapid increase in unemployment there. It's been said that there are 100 million migrant workers in China...

But, back to my main point. We import more than 2/3 the oil which we use and our "free trade" economic system depends on that oil both being available and cheap. There are lots of folks that think the U.S. should somehow become "energy independent", which, to me means that we will strive to reach a point at which we no longer import oil or oil products. I see no mechanism to achieve "energy independence" absent market intervention, such as increased tariffs, taxes or import quotas.

Not only that, but as Peak Oil begins to hit home, the price of that oil which we do import is likely to become much greater in real dollars, which will then be amplified by inflation such that nominal dollar costs will go ballistic. If this scenario follows, "free trade" (in an international sense) as you describe it will begin to disappear. The alternative to "energy independence" is a continuation of our dependence on other nations for oil and the outflow of ever more massive quantities of our wealth to these other nations. As we lose our ﻿manufacturing base, we will become an exporter of commodities, such as corn and soybeans, and an importer of finished goods, a virtual colony to those rich foreign nations, China and India.

I've been mostly unemployed for the past 30 years, in part because guys like you hired people from other countries instead of hiring me.

In my own case, I've always been a technical contributor, not a management type. I've hired a grand total of one person in my career. And she was a graduate of the local state university. The high tech corps I worked for, hired foreigners -but via the green card situation nearly all became citizens. The few foreigners that were hired and work overseas were in other OECD countries, such as Europe, and Japan. At least half of our sales were overseas, and more than half the employees were Americans. So, at least in the case of these outfits, the net effect on US employment (of the global model) was strongly positive. This does not mean, that the much more common and mundane applications should follow this model. In our case, we needed the best scientists/engineers in their specialized areas. IMHO at the highest levels of talent, hiring foreigners is a big plus for out economy, i.e. more good jobs are generated than lost. This calculus probably doesn't apply at the lower levels of talent, where I am afraid the motivation is to cut costs, rather than to obtain the best possible talent.

But, I agree our system can be horribly wasteful of our domestic talent. Because of the lack of a lucky break, a lot of highly talented people never get to demonstrate what they could contribute -if only they'd been given a chance.

The trouble is that while all this has a certain emotional appeal, starting a trade war might cause average wages to fall much closer to Third World levels in a hurry with little time to adjust. If US exports are largely shut down in retaliation, it's going to much more problematical to pay for oil than it was in the 1930s, in part for just the reasons you allude to. I'd expect a trade war to play out in a year or two. There would be no serious political possibility of adjusting the infrastructure fast enough, certainly not in a litigious country where the courts enable any petty malcontent NIMBY who happens to stagger by to singlehandedly shut down any project, no matter how vital that project might be.

I have no doubt that free trade is better for a country, in the aggregate. In this, the neoliberals are absolutely correct.

What they ahve always failed to mention, or even acknowledge, is that just because the nation is better in the aggregate, that does not necessarilly mean that everyone in that country will end up being better off because of free trade. Actually, it is inevitable that there will be losers as well as winners. More than that, it is not only possible, but even likely, that there will be far more losers than winners.

A few big winners who rake in megabucks, the majority treading water and actually seeing their real income slide, and ever more people slipping into poverty. Doesn't that pretty much exactly describe what the USA has become?

The way that outcome could have been avoided would have been to tax the windfall reaped by the lucky few, and use it to provide REAL, BROAD BASED adjustment assistance to the rest of society, especially those who ended up with the short end of the stick. Instead we got this tiny litle joke of a Trade Adjustment Assistance program, which was just about as effective as bailing out the Titanic with a Dixie cup.

I don't understand how free trade could be better if there are more losers than winners economically in the richer countries. I don't see how free trade could be better if it encourages the taking advantage of desperate folks by providing them a barely living wage and polluting their environments in the poorer countries.

I think that if a system must be implemented on top of a system (taxation of windfall due to free trade) in order to ensure equitable effects on the population as a whole, there must be something inherently unbalanced about the initial system.

Hmmm.. rather convoluted sentence structure there. I'll try again - if you have to have an oversight mechanism to redistribute the economic benefits of a system, then the system as designed appears to be unbalanced.

I don't understand how free trade could be better if there are more losers than winners economically in the richer countries.

If the winners gains per capita are much larger than the losers per capita loses, the the aggregate sum could be better. Whether this is better for society as a whole is a different matter. In classical economics, where they are concerned with somewhat low tech widgets, the gainers far outnumber the losers (anyone who doesn't lose his job gets cheaper goods). But, that probably is a poor model for modern economies.

I have no doubt that free trade is better for a country, in the aggregate. In this, the neoliberals are absolutely correct.

What they ahve always failed to mention, or even acknowledge, is that just because the nation is better in the aggregate, that does not necessarilly mean that everyone in that country will end up being better off because of free trade. Actually, it is inevitable that there will be losers as well as winners. More than that, it is not only possible, but even likely, that there will be far more losers than winners.

A few big winners who rake in megabucks, the majority treading water and actually seeing their real income slide, and ever more people slipping into poverty. Doesn't that pretty much exactly describe what the USA has become?

The way that outcome could have been avoided would have been to tax the windfall reaped by the lucky few, and use it to provide REAL, BROAD BASED adjustment assistance to the rest of society, especially those who ended up with the short end of the stick. Instead we got this tiny litle joke of a Trade Adjustment Assistance program, which was just about as effective as bailing out the Titanic with a Dixie cup.

I've been lamenting the frequent power outages we've been experiencing lately (four extended cuts in the past month and a half and two brief trips during our most recent snow storm). Yesterday, thousands of south-end Haligonians were left without power for eight hours due to an equipment malfunction.

In an effort to improve reliability, Nova Scotia Power has announced a $100 million capital spending programme.

Our situation is by no means unique; distribution systems throughout North America have been suffering from years of benign neglect. If electricity is going to play an increasingly larger role in our economies as we transition away from oil, upgrading our distribution systems will be critically important (and astronomically expensive).

On a more optimistic note, the likelihood that electricity from the Lower Churchill Falls will eventually reach our province has been notched up ever so slightly.

See my comment about declining grid reliability in Sharon Astyks Adapting in Place thread. I think that those that envision a sudden and permanent grid shutdown may have it wrong, but those who think it is going to stay as reliable (which is considerably less than 100% 24/7/365 already, as you have documented) as it is now are also mistaken. As our economies become more resource constrained, the resource inputs required to maintain grid reliability will also become increasingly constrained, and grid reliability will inevitably decline.

For each of the downward steps I have described, there are places in the world that are living with that level of reliability right now. A future characterized by declining grid reliability is indeed likely for us.

As our economies become more resource constrained, the resource inputs required to maintain grid reliability will also become increasingly constrained, and grid reliability will inevitably decline.

I don't think that is preordained. If we put sufficient priority on relaiability -icluding load management, we ought to be able to maintain similar levels of reliability (not counting the occasional cutoffs, or reduced power periods for those who accept interruptability as a tradeoff for lower price). Managing that should be well within our technical capabilities. But, if we choose to ignore the issue, then your vision could well come true.

The thing is, though, the USA (and evidently, though maybe not quite as badly, Canada) has had a very poor record of maintaining its infrastructure over the past three decades - and those were what we will soon be calling "the good old days", when the economy was booming. Now, people are belatedly starting to realize that perhaps we should be paying more attention to our infrastructure. Unfortunately, from here on out every dollar spent on maintaining (let alone expanding or improving) infrastructure must be a dollar taken away from some other high priority need. Every ounce of copper that goes into maintaining the grid is an ounce of copper that can't go into an EV motor. Every cubic foot of natural gas that fuels a generating plant is a cubic foot of NG that can't heat a home. And it is likely to only get worse. MIGHT TPTB nevertheless recognize the importance of infrastructure and make it a top national priority? Possibly. But WILL they? I wouldn't bet on it. Past behavior is the best predictor of future behavior.

Looking for a silver lining wherever we may find one, no matter how faint nor tarnished it may be....

One thing we stand to gain from this delayed investment is that these replacement systems, when they do arrive, will likely be more energy efficient and better suited to our needs than one installed ten or twenty years ago. If we had rebuilt our distribution systems early on in their replacement cycle, we would have installed systems that would have been considered optimal/appropriate at that particular point in time; today, with much higher electricity costs; more costly labour and materials; the availability of more energy-efficient technologies; and recognizing the potential for greater load growth in the years ahead due to fuel substitution, in-fill development, a possible migration to electric vehicles, etc.; our new systems will be, presumably, better tuned to our future requirements. In practical terms, what this means is a move towards higher distribution voltages (e.g., 27.6 kV versus 13.8 or, as in my case, 2.2 kV) and, hopefully, Energy Star transformers (http://www.aceee.org/press/0608tr-nopr.htm), as well as designs that place greater emphasis on energy efficiency and a reduction in material requirements.

The temperature in Melbourne has just hit 46.2 degrees - a new all-time record. The high out here at the airport has been 46.8 degrees (116 on the old scale). Bushfires have cut the main Melbourne-to-Sydney freeway.

They did have a few hot days in January, though the February heat wave causing all the anguish indeed looks to be a one-day wonder. With these exceptions, the weather seems to be generally much more comfortable than in most of the continental USA in high summer. Even in the northern regions, would that we mostly had highs of around just 70F and dew points below 60F, often well below 60F...

Well, on the Weather Underground charts, I see a few hot days in January, and a single isolated hot day in February, with enviably moderate temperatures in between and a forecast for more fine cool weather. Given that English-speaking Australia has almost no history, February's hot day looks like a very transitory and trivial weather blip that could readily have happened countless times during just the last millennium. After all, there's no reason to assume that daily high temperatures are Gaussian - surely the tails are fatter than that. So in the domain "anything's possible", it could indeed be climate, but a single isolated hot day is not, of itself, climate. I would suppose it's merely the random vagaries of wind blowing off the oven-like interior, and that it might well be possible for it to get another five or ten Celsius hotter for periods of a few hours. (In such a dry climate, of course, bush fires are no surprise whatsoever, though I'm unsure how many bushes there are for them to burn...)

What I find far more of a surprise is that a few hot days seem to do such a job on the commuter rails. Are the rail authorities in southeast Australia as inept and stupid as the authorities in Britain, where the most utterly trivial dose of "the wrong kind of snow" or even "the wrong kind of leaves" seems to bring everything nearly to a standstill for hours or even days?

What I find far more of a surprise is that a few hot days seem to do such a job on the commuter rails.

I can imagine they were designed for a max temperature a few degrees lower. Once the steel expands beyond what the tracks were designed to handle, the only way for it release is by buckling. Having seen the misery I faced from underspec local block transformers a couple of summers back when we had two days of similar temps here (N California), I am not surprised that they wouldn't have included enough of a safety margin. In our case, the temps were only similar to the all time record highs (i.e. they should have been expected during the lifetime of the infrastructure).

That high temperature was accompanied by strong hot winds leading to massive bush fires. At latest count 640 houses have been destroyed and at least 40 lives lost, these figures are likely to rise.
Whether GO is partly the cause or not, natural disasters are on the increase.
Some of these fires were deliberately lit, there were even reports of idiots going around relighting fires after the fire-fighters had put them out. With humans of that mentality what chance have we got with PO or GO?

Sorry to read about this loss of life, housing, and habitat. Years ago, I had posted a similar, potential scenario of a firestorm burning large amounts of my Phx during our wind-whipped, summer monsoon season.

Most people have no idea how fast a fire can spread; I posted prior links on how some fires and toxic smoke covered ground much faster than a person can run. This can either be inside a building or outside in the open. Even very-experienced firemen and firefighters can be hopelessly trapped very fast, many civilians wouldn't stand a chance.

Latest info is 750 houses gone and 141 lives lost, and they are still finding more.
This is Australia's worst natural disaster.
May not have anything to PO of global financial crisis but sure takes your mind of these problems.

I've missed a few days so maybe this has been thoroughly discussed but Lovelock apparently thinks massive creation of biochar is our only hope for doing something serious about carbon emissions. All the other stuff,in his view, like wind generators,etc., is just a waste of time, energy, and money.

The big picture is that more than 99% of all the carbon taken up by plants is liberated within a year and this makes up the most carbon contribution.

This sounds like something that would be worth a few million dollars of research, perhaps from the stimulus package.

Well, he's had a fine career. He's 90, and about to go into space, courtesy of Xprize-Virgin Boy.. hell, I'd go, but it would sure take a brass pair to then talk about what a waste of energy it is to set up alternative power supplies.

Darwin's Dog has less confidence in the biochar option laid out by Lovelock. (Strangelove? 'Mein Fuehrer, I can valk!')

The deforestation of Iceland by the Vikings (if land cannot grow sheep, it is useless !!) produced about 6 billion tonnes (metric) of carbon into the atmosphere. About 11 months worth of global emissions (pre-depression)

Reforestation with MUCH larger trees (Sitka spruce, Siberian larch, lodgepole pine are 3 of the 5 top trees being planted, all 3 will grow MUCH larger than the 15 m native tree, Icelandic birch) should recpature more carbon than was released.

Why weren't the trees much larger to begin with? Much larger cultivars established here in my northern part of the continent do not appear much different than the local ones. Not a scientific statement - just an observation.

I have a lot of respect for Lovelock, but I don't make sense of his coming to terms with the 90% of the human race being wiped out yet being annoyed that wind turbines are 'spoiling the countryside'

If we are in for some seriously bad times towards the end of the century, and its already too late to avoid serious disaster surely the best we can hope to do is build long lived infrastructure (wind, nukes, pumped storage, electric rail etc) to give our future generations the best chance of survival.

I would support a massive biochar programme, but it would have to be done on a huge scale to have any major effect.

If you gassify the wood and use it for space heating / cooking, I guess it would be of a similar EROEI to biofuels, although I have seem claims for fire wood having a much higher EROEI, but would obviosuly depend how far away you sourced the wood from etc. I have visions of small plantations of willow or bamboo being grown in the garden of the house they will eventually be burnt in. Growing dedicated biomass from composted human waste might be more acceptable to the majority of people instead of using them on food crops.

Theres loads of plans for making simple wood stoves and / or charcoal from steel cans online, you can run spark ignition generators off the gas too.

I would support a massive biochar programme, but it would have to be done on a huge scale to have any major effect.

I think the longterm effects need to be analyzed for each biome and soil type. It won't increase soli carbon storage in all places. I think it would provide a useful carbon wedge, but isn't a climate cure-all. More importantly it should help with soil fertility, which is going to become critical as the fertilizer supply runs out.

My gut tells me that a massive biochar program just might risk somewhat fewer unintended consequences than most of the other harebrained massive geo-engineering schemes that I've heard. I doubt that we can ramp such a program up quick enough and big enough to make much difference, but if TPTB ever decide that they must do SOMETHING. . .

I have a suggestion for the feedstock for the biochar: dollar bills. There seems to no longer be any problem with expending an infinite amount of these, so why not just burn (or pyrolize, I guess) them?

This paper utilizes the population of personal bankruptcy filings in the state of
Delaware during 2003 and finds that household expenditures on durable consumptions,
such as houses and automobiles, contribute significantly to personal bankruptcy. Adverse
medical conditions also lead to personal bankruptcy filings, but other adverse events such
as divorce and unemployment have marginal effects. Over-consumption makes
households financially over-stretched and more susceptible to adverse events, which
reconcile the strategic filing and adverse event explanations.

Basically, save your money instead of buying crap and then when problems arise you will be ok. I think my Mom taught me that when I was 5. Here are some choice quotes:

"Further, about 8 percent of households filing for Chapter 13 own at least one luxury-brand automobile, closely resembling the pattern for the control group."

"Mortgage debt averages 1.93 times the bankrupt households’ average 2003 income, more than twice as large as the ratio of 0.79 for the control households."

This paper makes me somewhat more accepting of people getting help with medical bills, but I don't support universal health care systems because then health care becomes just another form of consumption and as the paper shows, the payer (government) has a higher chance of going bankrupt.

With respect to health care, the more important metric is the total cost of health care born by the citizenry, whether it be direct, personal expenditure or government expenditures. Those countries with universal or near universal health care have consistently lower overall health costs than the U.S. They also appear to have as good or better health outcomes for the population as a whole. While universal health care might cause government expenditures to increase, it would cause personal expenditures to decrease by more, with a net decrease of overall health care costs.

In this instance, health care's contribution to government bankruptcy would not be significant considering the fact that there would be more money left over for taxes to support such a health care system.

If, however, we continue to deficit spend for everything, then the Government will become insolvent regardless of what we do with respect to health care or anything else.

Government intervention usually leads to perdition. All of the problems that we lament on this site including oil dependence, global warming, agrobusiness, debt, pollution, the recession etc. are facilitated in one way or another by some massive government program. It was the government that subsidized our home buying sprees and then packaged mortgages into securities and laundered them through the banking system. Now, after the bubble popped, they are stimulating the economy to create a few more bubbles to help us get over the last one. No thanks.

I shudder to think how much worse the government could make healthcare.

Keithster,
Your opposition to universal health care begs the question: who do you believe should die because they can't afford the doctor, surgery, or medication?
Are they black people? Hispanics? Poor folks?
What I believe should die is the parasitic health insurance industry. Throw out our unnecessary military industrial complex and universal health care is easily affordable.

Our current health system has a huge number of problems. Way too much is spent on health care for very elderly people, with little benefit. Physicians make money by treating the wealthy and those withe Medicare with the most surgeries / medicines possible. Changing diet and exercise is rarely considered, nor are medicines that are over the counter.

Also, physician incomes are too high relative to the incomes of the average wage earner.

Also, physician incomes are too high relative to the incomes of the average wage earner.

Overall our healthcare industry is roughly a sixth of the economy. Reducing the massive waste is going to have a serious impact on the number of jobs this sector supports, and on the salaries and profits made by the providers. The political resistance these people are going to put up to protect their gravytrain will be overwhelming. Add in the preponderance of anti-government feelings in the US, and I don't see any chance in hades of us actually fixing the problem. Of course the cost grows by a few percent per year, so eventually it will become so high that it will break us. Until that is painfully obvious to even the Joe the Plummer types, I don't expect to see any real progress made.

If things fall apart, health care will fall apart also. Already, inner city hospitals are having a real problem, because there are so many uninsured coming for treatment. Add the lack of elective surgery, and there are real pressures on the system.

State and federal systems are going to be hit very badly on tax collections. It will be harder and harder for them to fund Medicare and Medicaid.

Add a little hyperinflation or deflation, and the insurance companies in the middle of these transactions will have financial difficulty as well.

I have yet to meet a black man who opposed universal health care. Every opponent of universal health care I've met have been either white people with comfortable incomes with health insurance or doctors from south Asia. I am not assuming all blacks and hispanics are poor. I've worked along side black people my entire working life and have witnessed first hand the racist bigotry perpetrated by white managers again and again. It is the history of social services in America pre 1960s to give more generous benefits to white folks than to minorities. there are many posters who advocate going back the "state's rights" over human rights Jim Crow days again. It has been the hidden agenda of the GOP for several decades. There are white folks with the attitude that if we had universal health care then blacks would have no reason to find a job.

As for the diet and exercise approach it just delays the onset of age related diseases. Unfortunately healthy eating is more expensive than sugary, salty, and fatty foods while fruits and veggies are not covered by any health insurance plan that I know of. I have yet to see a plan that pays for stop smoking services. And stopping smoking only changes the odds or delays the onset of cancer. For instance my father died of lung cancer 22 years after he stopped smoking. 9()+ per cent of all doctor and hospital visits are for disorders we have no idea how to prevent including many forms of cancer. Doing certain things and not doing other things only change the odds and overall do little if anything to prevent completely any disease. And then there are very expensive accidents that can max out even good insurance plans.

I shudder to think how much worse the government could make healthcare.

I think your view of government has been jaded by the combination of ideology and poor government prevalent in the USA. Our poor government, owes a lot to the considerable efforts of the libertarian class to prove that government is always bad. They have, and are continuing to sabatoge efforts to make government work for the people.

There is perhaps a grain of truth in this, but regardless of how the government got to be the way it is, and as bad as the current medical non-system is, I shudder too. An awful lot of healthcare is rendered less useful or even entirely useless if it is delivered in the dilatory, sloppy manner that is bog-standard with government jobsworths. I do suppose one can argue that different government functions occupy different silos, and medical care would somehow be Magically Different. However, the nastygrams I saw one time in the Edmonton, Alberta transit system - transit-system advertising is where you really see the underbelly of politics - over medical care told me otherwise and in no uncertain terms. Indeed, it's hard to think of much of anything that government delivers in a timely manner, except occasionally for stuff it benefits from, such as tax bills. The problem may be worse in the USA but it's not exclusively our problem.

Government jobsworths often seem too shiftless, incompetent, or even just plain stupid, to accomplish something as utterly, moronically trivial as getting the noon bus underway from the town square when the big hand and the little hand on the ceremonial clock are both on the twelve. So before I would entrust people like them with complex, time-urgent, life-critical medical tasks that actually take forethought, planning, and occasional hustling beyond the call of over-unionized work-to-rule sloth, I'd like to see them demonstrate first that they can handle the trivial tasks, which is currently a matter for grave doubt, and then move up gradually. After all, any randomly chosen parent who left their child stranded waiting at school for an hour or two in the bitter cold might just be questioned by Child Services. Why should I expect anything less of government functionaries who are paid not just reasonably good wages or salaries, but ultra-super-deluxe luxury fringe benefits besides?

Under the plan, projected to cost $200 million to $300 million, one of five boilers at the Charter Street plant will be converted to burn biomass, which could include cornstalks, wood chips and switchgrass. A new boiler capable of burning 100% biomass would be built, and four coal boilers would be converted to burn natural gas.

I'm both excited and apprehensive about this one. It's going to be very interesting to see how well Dane County and surrounding areas can absorb a "vacuum cleaner" customer seeking a couple of hundred thousand tons per year (close to 30 tons per hour) of biomass to burn. On the one hand, I wish the UW full success with the project, and I hope they manage to displace a lot of coal consumption. On the other hand, as a firewood scrounger in the area, I anticipate that the free & easy wood may be a bit harder to come by.

Another issue will be transportation. I haven't heard anything about how they intend to get all this material in to Charter Street. One option would be to use the existing rail link and establish collection depots at strategic locations outside of town. This would probably be the most efficient approach, but it would require some more up-front work. Presumably the fallback plan would be a lot of trucks rolling into the south campus area at all hours.

Yeah, a week or two of that, and those poorly built little side streets (Dayton, Charter, maybe Spring) will be torn to shreds. But while I could be wrong, I find it hard to imagine they're planning to go through two sets of expensive labor-intensive loading-and-unloading steps (both truck and train) instead of just the one.

There is the issue of keeping all that low density biomass stored and dry until winter + transporting into an urban area. I doubt it will have a positive EROI.

What really bothers me, though, is that UW buildings are so poorly insulated. Event the newest ones leak air like sieves. If the UW spent 300 million on weatherizing, they could do away with the charter street plant altogether.

Oilfield service provider Baker Hughes Inc. on Friday said that both the international and U.S. rig count for January 2009 declined, as the oil industry scaled back drilling amid sinking oil prices and a sharp decline in energy demand.

The company said the international rig count for January 2008 dropped 3 percent to 1,044, from the 1,078 counted in the prior month and down nearly 1 percent from the 1,053 counted in the prior-year period.

Interesting! I called the local Toyota dealer a couple days ago and asked when they would have the new Toyota IQ (56 MPG)(Smart Car look-a-like)available for sale. Sales person said they had no idea when or if it would be offered in the USA (Currently on sale in Europe and Asia?). Maybe Uncle Sam is keeping it out because it gets too good gas mileage? Government isn't the solution, it is the problem!

Along the same line, did anyone else see the article in the Wall Street Journal a couple days ago on autos where the Chrysler spokes person said that Chrysler's plan is to sell 35% of Chrysler to Fiat and then Chrysler in the US can continue to focus on designing and building full size pickups and full size cars and offload the design and manufacture of those small fuel efficient cars that nobody wants on Fiat. (Smart for Two car still has a 12 to 18 month waiting list to buy a new one!) Sound like a really great plan to use the Billions of bailout money to retool and increase USA auto manufacturing jobs?
If the Feds give Chrysler any more bailout money the Feds need to be hung by their heels from the nearest flagpole until enough blood runs to their heads to restart their brains functioning!
Pouring more bailout money into the auto and financial industry is like pumping expensive fuel into a sinking ship. All you are doing is sending expensive fuel to the bottom of the economic ocean. The economists solution is to knock another hole in the hull of the sinking ship to let all that water out that is pouring in from the other holes eaten in the hull by the toxic waste and toxic management.
Man the Lifeboats!

Are you aware of the size of the obligations taken on by the Fed on your behalf? I think the current running total for Fed and Treasury is about 9 trillion dollars. Why do you think auto bailouts dominates the discussion? It is like giving out speeding tickets at the Daytona 500.

asked when they would have the new Toyota IQ (56 MPG)(Smart Car look-a-like)available for sale.

I haven't heard of this vehicle. Perhaps it wasn't designed with US safety standards in mind. In any case Priuses are a buyers market. Perhaps your local dealer is desperate enough to give you a good deal. The Prius is EPA 45mpg, but I'm averaging 55! The new model coming out in a few months is supposed to get 50mpg EPA (or about a ten percent improvement). The Prius is bigger/safer than a Smart, but because it is more aerodynamic, it should be almost as efficient. I would be wary of trying to get good milage via the diesel route, as the relatively scarcity of diesel with respect to gasoline is likely to get worse with time.

The people who own the cabin that adjoins our place asked me to do a quasi-energy audit of their city house south of San Francisco. I found a lot of stuff they could do, loaned them my infrared thermometer and a couple of books about house weatherizing.

They've spent about $650 so far on simple stuff like a little bit more insulation (they still have a way to go on this) and a heat shrink storm window kits (these have an adhesive strip to hold the plastic film in place on the window frame and then a hair dryer sinks the film tight).

The result? Their combined electric and gas bill went from ~$300/mo to $150/mo. Almost as important to them is that their house is more livable. They still need to address their skylights and one bathroom which has a glass ceiling of single pane glass (the room is about 8x10').

It is amazing how easy and rewarding the "low-hanging fruit" are in home energy use. It does get progressively harder and more expensive to capture additional gains. I've a post-war house in Spokane and though we have made tremendous progress so far, things are getting more complicated now and figuring the best path is not always obvious. I find that NPV and IRR are not usually the best tools in choosing which projects to tackle; what is your experience?

Lights add heat to the room, windows take heat out of the room. I can live with turning on the lights in the bed and bath room in winter. The guest room and other lesser used rooms can be blocked year around except when you need to have natural light.
Living room windows stay unblocked for the cat to look out. Reasonable payment for the good company he gives!

I took my upstate NY winter heating bill from about $800/month in January to $150/month with about $800 in tweaks. This is with expensive electric heat.

By the way, regarding your friends' bathroom skylight: I have a laundry room with skylights. I figured that in the winter I could live without skylights, so I just covered them with some 2" foam/foil board. This is about R-19 effective. Cost: about $20, and 30 minutes of time. Take them out in late March. You appreciate a skylight more when you don't have it for four months a year. For a little nicer solution, get a piece of 1/8" high-density fiberboard ("Masonite"), and attach 12" of fiberglass insulation to the back. Paint it with reflective thermal paint. Screw it in with standard construction screws. Looks like a normal ceiling, and is about R-38 plus reflective.

They would find the cheap way out (even with better insulating value) to not be visually pleasing. I suggested that they either use 10mil clear vinyl sheeting or, preferably, 1/8" Plexiglas that they would simply leave in place permanently.

hi todd, ot but if your on the horn
A Buddie and I harvested about 3,000lbs. of guano today, all in different stages of decomposition. I've never dealt with this amount and don't quite know how to play it, you? We were thinking this stuff has been accumulating for about 4.5 years

Where did you get your infrared thermometer? How do they compare to thermal imaging cameras, which cost an arm and a leg? They as effective for the money? I would imagine they are like flat discs that placed on the wall or window...

you can buy a cheap chinese imported one at harbor freight. i think for around $30. this type will give you a reading at a single point, as opposed to a camera which gives a color map of an area.

mechanics tool dealers, like snap-on-tools or mactools were the first instance that i saw. they were about $ 100 a few yrs ago.

we used them in the redimix concrete business to determine the temp of the concrete. because steel is such a good conductor of heat, the outside of the drum will give a reading within a few degrees of the concrete temp. doesnt work on a fiberglass drum, however.

The stimulus bill will be pushed out of the spotlight-Congress must call for a new investigation-scrawny little A-Rod has tested positive for roids (as of 2003-now it leaks out). Good thing the NFL is as pure as the driven snow-I wonder why many NFL players could snap A-rod in two like a twig?

State tax collections plummeted in January as the recession deepened, raising the likelihood that lawmakers will have to cut spending even more than they planned.

Collections dropped about 14 percent, or $262 million from January of 2008, the Georgia Department of Revenue reported Friday. For the first seven months of the fiscal year, collections declined 4.8 percent, or $499 million.

The two largest income streams for state government, personal income and sales taxes, decreased 13.3 percent and 17.2 percent in January.

Changes of this order of magnitude are horribly disruptive. How can a state expect to keep funding all of its programs and pay back its debt? Will be there a lot more states in the same condition as California?

I was listening to a local radio talk show this afternoon, and they were talking about how much current events remind them of the latter two parts of Atlas Shrugged, and I have been thinking the same thing.

An increasingly desperate central government, demands for more and more power, constantly changing rules, money flowing to those who are well connected ("The Aristocracy of Pull"), massive efforts to bail out failing companies. . . . leading finally to the "John Galt Plan," a plan that the government promised would save the country, as soon as the government could "persuade" Galt to tell them what to do.

It's not a perfect analogy (for example, Rand was an energy cornucopian), but a lot of recent news headlines sound like something that Rand wrote.

The communist revolution attempted to take from the rich and give to the poor without rewarding people for producing more. They became unproductive and had to open up to capitalist competition or continue in poverty like N. Korea. S. Korea with its capitalism and freedom of religion has outperformed its athiest neighbor to the north many times over.

Taxing healthy companies to give to companies run into bankruptcy by bad management is akin to legislated ruination. One American may build a better car for half the hourly wage of another American, and the government hands over more even money to the less productive worker. It is not sustainable. Debt financed government is becoming a pyramid of debt that is at risk of internal collapse. The external debt of the U.S. has been growing rapidly. Saw on T.V. numerous manufacturing plants closed or reduced in Rhode Island. I suppose it is less costly to do business in China, and there are fewer environmental regulations, thus China had growth. At one point does one have more objectives than cleaning the air that is already clean? Like putting food on the table and paying off the mortgage might be a priority. Exporting jobs to China because manufacturing is dirty may not improve the employment situation, nor lower the crime rate.

S. Korea with its capitalism and freedom of religion has outperformed its athiest neighbor to the north many times over.

One, your religious rant, mini- though it was, is ridiculous. WTF has religion got to do with economic growth? Christ on a stick... FYI, Korea has never been more than 1/3 Christian. Buddhism, by contrast, is not deistic and is not really a religion, but a belief system, despite the semi-deification of The Buddha. 1/3 of Koreans are Buddhist, another 1/3 are atheist or shamanists, roughly speaking.

Two, you don't know jack about the Korean Miracle, is what I think. Korea had no democracy until 1993 when the first democratically elected president since about 1960 was elected, Kim Young Sam. Prior to that, you had a series of military-backed presidents who won elections fraudulently, or via coups.

This was all tied into the Chaebols, or what would normally be called multi-national companies. Those companies' growth and power came via bribery and corruption, not freedom and democracy. All the Korean giants were born in that era and might not exist in their current forms without the massive corruption that allowed their massive growth. Essentially, this was Moussolini-style fascism complete with jailed dissidents - Kim Young Sam and the more recent Noh Moo Hyun were both jailed in their early years. If I'm not mistaken, at least one of them suffered an allegedly gov't sponsored attempted assassination.

Had it not been for the Gwangju Uprising in the 1980's, it might still be that way. Using Korea as a model of democratically-enabled capitalist growth is like holding China today up as a perfect model of Communism. It just ain't so.

Korea would serve as a better model for what activism can achieve, as well as the fore mentioned quasi-dictatorships. While we have failed to maintain our activism as we have gotten (relatively) fat and happy, Koreans will still shed their blood for their beliefs. It is one of the things I most admire about this country. But as an example of unfettered capitalism? Not at all. In fact, it has been during the time frame of the last 12 years that Korea's economy has stumbled... yup, during the heights of democratic government. Personally, I see that as more cyclical than causal. I called the slowdown way back in 1994 telling my friends and wife at the time that Korea's economy had to go through a maturation process which would lead to economic growth along the lines of those of already-developed nations. I predicted interest rates in the single digits at a time when a normal bank account paid 12%, etc. (So, don't jump to any conclusions, I think it was cyclical, not because of the right to vote being what it should be, but the confluence is interesting.)

Ilargi: Oh, wait, I wanted you to see this quote from the Obama economic team's main finance guru, Larry Summers. Incidentally, Paul Volcker recently accused Summers of slowing down the attempts to form the economic advisory board the president presented yesterday. A mere two and a half weeks into his presidency, Obama is confronted with ugly power games. This quote comes from the 1994 book FAITH AND CREDIT: The World Bank's Secular Empire, by Susan George and Fabrizio Sabelli. At the time he said it, Summers was Treasury Deputy Secretary under Clinton. Robert Rubin was Secretary. Feel free to read it twice and let it sink in:

"Lawrence H. Summers: The laws of economics are like the laws of engineering. There's only one set of laws and they work everywhere. One of the things I've learned in my time at the World Bank is that whenever anybody says "But economics works differently here", they're about to say something dumb. [ p. 106 ]"

"There are no...limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn't a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs. [ p. 109]"

Ilargi: Yes, that is the same man who today presides over Obama's economic plans. Are we getting the picture by now? Larry Summers is a walking talking lump of brain damage. Who, it just so happens, decides over your children's future welfare. Go read that quote again and tell me how you feel.

Before we go inditing him for past statements, I'd like to see if he has changed his views. He is allegedly an extremely bright fellow. Normally that would indicate that he can quickly learn from his mistakes. I would also like the context of the statement taken into account. That infamous world bank quote, about exporting pollution to poor countries, was intended to incite discussion, not to be a serious policy recommendation. A man's enemies can easily take something completely out of context and make it sound horrible. We shouldn't abet that process by neglecting due diligence before condemming.

Wow, it looks the oil glut is huge. This article outlines a plan to store two billion barrels of oil, and get this, they are going to store more than a years worth of US oil production in one ship! Maybe it's a magical ship, like the magical Huber/Lynch oil fields (where discrete wells peak and decline, but total field production, the sum of discrete wells, increases forever).

In the latest sign that energy producers are still pumping too much oil, Koch Supply and Trading, the US oil firm, has booked a supertanker for six months to store about 2 billion barrels of crude off the east coast of the Emirates.

"Let the people know this is a very difficult struggle. Somebody threw us in the middle of the atlantic ocean without a life-raft and we're trying to determine what's the closest shore and whether there's any chance in the world to swim that far. We don't know."
- Congressman Paul Kanjorski

The unprecedented emergency action comes in response to rainfall levels that are 80% below normal in wheat-growing provinces and amid economic unrest in rural areas.

..Xu Yinlong, a researcher at the Chinese Academy of Agricultural Sciences, said the government's decision to declare its highest-level emergency was unprecedented, something that did not occur during the country's last major drought 30 years ago.
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IMO, mining high mountain glaciers would be more effective than using soldiers to handwater plants, but this drought may be so severe that they might have to do both, plus much more, like abolishing thrones, then going to full-on O-NPK recycling.

Do you think the average Californian and Arizonian will happily spend their days moving small amounts of water across countless acres of crops?

My back starts aching just looking at this. You would think they would at least have 10-15 gallon backpack jugs and a 3-4 foot dispensing tube so they could water even more accurately, with fewer restocking trips, and most importantly: walk/stand fully erect while traversing each crop row! Yikes!

At least this guy is using his head to be as exosomaticly efficient as possible:

Are island nations early harbingers of things to postPeak come? Island nations are obviously tightly geo-constrained in terms of their Overshoot adapting and migrating to adjust to changing energy and resource depletion.

I have posted much before about the island of Sri Lanka, the isolated 'mountain island' of Nepal, and we are all familiar with Haiti, Eater Island, Greenland, and Iceland. Are the UK, Hawaii, Philippines, etc soon to join the list? Madasgascar seems to be joining the island list:

Living on Oahu in Hawaii, it certainly feels as though only an intact USA empire will provide a reasonable guarantee of food arriving. At the point it splits up, Hawaii may be on its own, and in that case, this would be a hungry kind of place to be. The big isle might fare pretty well if there's a bit of NPK and some wheelbarrows, though it may once again become 'remote'. But remoteness may be desirable at that point.

In another sense, though, many landlocked areas may effectively become "islands". Actual islands in the ocean with decent harbors have reasonably year-round low-energy access to and from other coastal areas. Of course, that won't matter at the point food is only being exported in exchange for other strategic materials.

Comes down to which risks one feels is worse. I won't die with frozen toes or lack of drinking water here. By definition, then, something else will get me...

Despite mostly steady prices on international terminal markets, fertilizer prices for farmers in the U.S. are starting to move higher, with seasonal buying demand kicking in...

..Prices for urea, DAP and potash all increased in USDA’s latest survey of Illinois prices this week, following trends from earlier in January at the wholesale level. Wide gaps remain between farmgate prices and those available at ocean ports.
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Please see the included charts by scrolling down.

Farmers are bracing for another economic hit anticipating fertilizer costs will at least double this spring forcing many to make tough decisions.

..“Taking nutrients from the soil is not like taking water from your well, it doesn’t just flow back in on its own you have to put nutrients back in the ground,” said Ebbett.

Robert Parker, owner of West River Green Houses, said water-soluble fertilizer costs have almost tripled in recent years forcing him to trim his order to stay within the budget.

“We had to look at the orders this year and cut back,” said Parker. “We cut our order in half and we’ll try to find other ways to deal with it.”

He said in some cases a bag that would normally cost $40 is now selling for more than $100.

Customers purchasing fertilizer for home gardening will also notice an increase. About three years ago a common type of fertilizer, 6-12-12, was selling for about $6.95 a bag, last year it jumped to $12.95 and this year Parker said it could be about $20 per bag.

“People are spiraling down further and further and it will spiral down to a point when there is nothing left and we’re nearly at that now.”
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IMO, the cheapest, most efficient, and easiest 'shovel-ready' projects involve minimal water usage strategies and O-NPK recycling, but I don't think our Pres. O & Congress is interested.

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